WAYNE Swan was urged three months ago to hit Fringe Benefits Tax on company cars but resisted because he was worried about the impact on middle and low income families.

As he was putting together May's budget, the former treasurer saw off those encouraging him to accept the proposal to boost government coffers by $1.8 billion as revenue dwindled.

It is understood Mr Swan was concerned the proposal - adopted last week by his replacement Chris Bowen to fill a hole left by moving from the carbon tax to an emissions trading scheme a year early - would hit teachers, nurses and police as well as higher income earners.

Mr Swan was also concerned about the impact of slugging middle income earners $1400 a year in marginal Labor electorates with 320,000 families Australia wide targeted by the measure.

Since Mr Bowen made the announcement with Prime Minister Kevin Rudd, leasing companies have begun making staff redundant with warnings the policy will devastate the car industry in Australia.

When Treasury presented the proposed slug to Mr Swan it is understood there were mixed views within the government on whether to implement it.

It was unclear yesterday if Mr Bowen was aware of Mr Swan's rebuff of the proposal in the weeks before delivering the budget.

Mr Bowen was flying back from a G20 Finance Ministers meeting in Moscow in Sunday.

He had resigned from Cabinet in March after Simon Crean's botched leadership coup so would unlikely to have known of Treasury's proposal before the budget.

"We don't comment on the deliberations of Cabinet or budget matters," a spokesman for Mr Bowen said.

Meanwhile, the government is refusing to bow to pressure from South Australian Labor Premier Jay Weatherill after his appeal to Prime Minister Kevin Rudd to delay the hit for locally produced cars and other measures to soften the impact.

"As the Treasurer and I have said the Government remains committed to implementing its policy to ensure the tax system is fair, including legitimate use of the FBT," Mr Carr said.

"We are always talking to companies about their investment planning and looking at ways to support Australian made products.

"We are also working with the South Australian and Victorian Governments to promote sales of Australian vehicles in fleets and have appointed an Automotive Supplier Advocate to work with the industry."